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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1977049 times)
Peter R
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December 15, 2014, 06:33:57 PM
 #18741

Growth isn't an axis on the chart. The y-axis is expectations not growth. By the time of maturity Bitcoin could be a lot bigger than it was at the height of expectations, but have lower expectations.

This is a true statement in general, however simple arithmetic (ok, and some reasonable assumptions about use cases) implies that the price of Bitcoin would have to be at least 100x larger if it had, say, a billion users. So, if the price of Bitcoin today was $5 million per BTC, then I would agree with you... the Bitcoin ecosystem could keep growing while the expectations (i.e., market price) would just keep going down (because expectations went unreasonably high, beyond the equilibrium value). However, at current prices, it's just impossible for Bitcoin to grow much more without also raising the market price.

I'll add that the new coin supply (25 BTC block reward every 10 min) makes it difficult for investors to cling to unrealistic expectations over the medium term. At ~3600 BTC/day, the current price of ~$350 / BTC requires ~$1.3 million of new capital (money, energy for hashing, etc) to enter the system.  A stable price means that there's sufficient demand to absorb these new coins.  A price based on "unrealistic expectations" cannot last because the new coin supply requires that market participants continuously inject new capital to back their unrealistic expectation---but eventually they run out of money and the price falls.  (E.g., if the BTC price was $5 million per coin like Chris mentioned, it would require $18 billion in new capital each day.  Even if every current holder refused to sell for less than $5 million the price would still drop unless those holders in aggregate can inject $18 billion each day to absorb the mining supply.)

Bitcoin's inflation schedule is quite ingenious actually because the new supply forces the price back to a level commensurate with new demand.  It's not possible for the price to remain overly-hyped for too long.  

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December 15, 2014, 06:47:58 PM
 #18742

Bitcoin's inflation schedule is quite ingenious actually because the new supply forces the price back to a level commensurate with new demand.  It's not possible for the price to remain overly-hyped for too long.  


yes it is, isn't it?

the asymptotic distribution schedule encourages new miners to get in and attempt to compete for these new coins with each and every new innovative or economically advantageous way they can devise.  current miners are encouraged to stay as long as they can keep up with costs.  new buyers of BTC are encouraged to get in on a new fixed supply currency that is "still" bootstrapping itself. 

it's obvious now (but not always in times past) that pre-mined or IPO'd altcoins are unfair to new entrants.
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December 15, 2014, 06:58:25 PM
 #18743

At ~3600 BTC/day, the current price of ~$350 / BTC requires ~$1.3 million of new capital (money, energy for hashing, etc) to enter the system.
Your list of capital types should include products and services.

Every person who sells their productivity for Bitcoin and does not immediately spend what they earn is contributing to that ~$1.3 million/day requirement.
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December 15, 2014, 07:10:29 PM
 #18744

Every person who sells their productivity for Bitcoin and does not immediately spend what they earn is contributing to that ~$1.3 million/day requirement.

This will be the key to a major price spike in my opinion.  The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.
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December 15, 2014, 07:42:45 PM
 #18745

The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.
They have to be paid in BTC, and they have to save in BTC.

Otherwise it won't work.
Jungian
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December 15, 2014, 07:48:13 PM
 #18746

The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.
They have to be paid in BTC, and they have to save in BTC.

Otherwise it won't work.

Not necessarily - They have to be paid in BTC thus causing "releasing" of coins from certain individuals (like yourself) for goods and services, and keep the BTC OR sell into the hands of wealthy USD holders buying the BTC from the Vendors/3rd Party providers and them saving.

We are in the transfer of wealth stage - but its being done quietly and off the books.  We wont see increase in price unless a true ETF hits, or we get within 6-8 months of halving.  

Sit back relax and enjoy the ride.

I would also tend to believe they intend to save some of the money and not spend ALL off it. The upside to have your whole paycheck in BTC but also spend all of it every month seems like a bad trade to me.

I think Monero (XMR) is very interesting.
https://moneroeconomy.com/faq/why-monero-matters
Adrian-x
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December 15, 2014, 08:06:11 PM
 #18747

The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.
They have to be paid in BTC, and they have to save in BTC.

Otherwise it won't work.

Not necessarily - They have to be paid in BTC thus causing "releasing" of coins from certain individuals (like yourself) for goods and services, and keep the BTC OR sell into the hands of wealthy USD holders buying the BTC from the Vendors/3rd Party providers and them saving.

We are in the transfer of wealth stage - but its being done quietly and off the books.  We wont see increase in price unless a true ETF hits, or we get within 6-8 months of halving.  

Sit back relax and enjoy the ride.

I'm generally in this camp, but I don't think many understand what's going to happen at halving, there is even a reasonable probability that Bitcoin may look dead 6 months after halving and then explode into its new price energy zone.

While I give credit to the velocity of money theory that creates value this is an end game occurrence. At the moment I think we have an equilibrium between mining investment and profit taking. If too many new coins are saved we'll see it reflected in an increase in difficulty driven by price, this could cause a rush to get into Bitcoin along with many other triggers like an ETF of some new "banking innovation"

I think the total traded coins are quite small and wealth transfer is happening but it's not a competitive environment, rather new owners are treading with caution.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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December 15, 2014, 08:13:02 PM
 #18748

Every person who sells their productivity for Bitcoin and does not immediately spend what they earn is contributing to that ~$1.3 million/day requirement.

This will be the key to a major price spike in my opinion.  The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.

Miners hoard a lot of coins too. Bitcoin companies accumulate bitcoins and their owners do so as well while they pay in bitcoins for time and services.

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cypherdoc
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December 15, 2014, 08:15:47 PM
 #18749

geez, gold and gold stocks getting bitch slapped.  darn it!  i wanted more rally to reload ZSL and DZZ! Angry
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December 15, 2014, 08:26:01 PM
 #18750

this is a really bad sign:

Melbustus
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December 15, 2014, 09:47:22 PM
 #18751

Adam Ludwin at Chain.com with some mostly spot-on thoughts:


Quote
[miners produce] by design, a secure financial network: one which is open, decentralized, programmable, and very inexpensive to use.


Quote
Without speculators, there would be no bitcoin.  They provide miners, applications, and other participants with liquidity.  If you have bought or sold bitcoin as a speculator, you have helped enable the emerging ecosystem...


Quote
Whether volatility increases or decreases, one thing is likely to be true: it won’t matter as much going forward as people think.


http://blog.chain.com/post/105287860141/why-bitcoin-apps-and-bitcoin-speculators-need-each


So Xapo, and now Chain, make my list of new VC-backed bitcoin companies with seasoned leadership who *actually* understand bitcoin.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
bambou
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December 15, 2014, 09:56:34 PM
 #18752

this is a really bad sign:



does that means gold mining is not profitable anymore? mining bitcoin maybe?

Non inultus premor
cypherdoc
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December 15, 2014, 10:08:21 PM
 #18753

this is a really bad sign:



does that means gold mining is not profitable anymore? mining bitcoin maybe?

it means gold's SOV function days are numbered.
Wekkel
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December 15, 2014, 10:21:36 PM
 #18754

it means gold's SOV function days are numbered.

Or paper gold's SOV function  Roll Eyes

                                 
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cypherdoc
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December 15, 2014, 10:24:12 PM
 #18755

it means gold's SOV function days are numbered.

Or paper gold's SOV function  Roll Eyes

the paper gold was the entire reason for the price ramp in the first place.  Roll Eyes
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December 15, 2014, 10:25:42 PM
 #18756

this is the Elizabeth Warren i know from 2008:

https://www.youtube.com/watch?v=DJpTxONxvoo
msin
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December 15, 2014, 10:57:40 PM
 #18757

The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.
They have to be paid in BTC, and they have to save in BTC.

Otherwise it won't work.

Yes, exactly, if they are paid in BTC, save their BTC, it will create an extremely scarce market.
smooth
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December 15, 2014, 11:07:05 PM
 #18758

At ~3600 BTC/day, the current price of ~$350 / BTC requires ~$1.3 million of new capital (money, energy for hashing, etc) to enter the system.
Your list of capital types should include products and services.

Every person who sells their productivity for Bitcoin and does not immediately spend what they earn is contributing to that ~$1.3 million/day requirement.

The concept I like to focus on is accumulation (of holding). Every bit of that new 25 BTC mined every 10 minutes has to find a home with someone willing to hold it. It doesn't really matter if that comes from miners holding it, investors buying it, or people trading goods or services and holding the coins they receive. In reality all of these play a role, and they all involve exchange of other resources for coins, but we can be sure that aggregate accumulation is ~$1.3m per day.

It is indeed helpful to price discovery and liquidity that this forces a constant market clearing process.  It is also no surprise that the scam altcoin market has moved to ICOs and proof-of-stake which lack such a process.

smooth
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December 15, 2014, 11:17:22 PM
 #18759

it means gold's SOV function days are numbered.

Or paper gold's SOV function  Roll Eyes

Correct. Paper gold has absolutely no advantages over BTC. At least physical gold you might imagine retains value if there is a catastrophic failure of technology (solar flare, communications infrastructure brought down hard by hacking, etc.), breakdown of rule of law (arguably has already happened), etc. Paper gold, forget it.
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December 16, 2014, 12:27:30 AM
 #18760

The more people are paid in BTC for services, employment, etc. the higher the price of BTC will go.
They have to be paid in BTC, and they have to save in BTC.

Otherwise it won't work.

Yes, exactly, if they are paid in BTC, save their BTC, it will create an extremely scarce market.

If I can dodge a LambShop for a second (becoming increasingly rabid of late I notice), this is exactly what all the 'permabulls' see as being almost inevitable. Eventually everything will be in BTC. Then the USD/BTC price becomes irrelevant, apart from roughly what it was just before everyone went full crypto.

5 years ago nobody could even imagine a world where money was anything other than what it currently was. Fast forward and there is a massive groundswell of people who now see what it could be.

You either see it and panic you are too late, or you don't see it and think you can make a few "oldbucks" off the rubes by out-trading them.

Call me a rube, I'm going all the way. Once it resumes its uptrend above the last ATH I'll skim as a hedge (even though my gut tells me not to bother, my math tells me I should) [thats my "full disclosure"]

Still one the most insanely +EV binary bets I have ever come across.  

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